Joint Operating Agreement: Relationship Between Operator and Non-Operating Working Interest Owners Joint Operating Agreement: Authorization for Expenditure (AFE) Royalty and Royalty Interests: FaUure to Pay; Conversion

摘要

Capstone, as Operator, owns 45.16% of the working interest in the well, and Tarrant through Trace Oil, as non-operator, owns 45.22%. An AAPL Model Form 610-1977 Operating Agreement (JOA) is entered into by the parties. Capstone proposes a workover of a well and sendsan authorization for expenditure (AFE) estimating the cost at $110,227.00. Trace consents to the AFE and commits to pay its share of the workover expenses in the amount of $49,845.67. When Capstone demands payment, howeverTrace pays only $35,337.02. Capstone's demand for payment of the AFE costs to the consenting owners advises them that all funds would be placed in escrow and that copies of the bills would be provided when the work is completed.